Previous coverage

SAN DIEGO – The city's nonprofit data processing agency budgeted $600,000 in raises and bonuses for its 250 employees this year – a largess that Mayor Jerry Sanders is questioning given current economic conditions.

Although included in the budget for the fiscal year that will end June 30, all the money was not necessarily paid out, officials say. No additional raises or bonuses are included in next year's budget.

In a Monday memo, the Sanders administration asked for an accounting of salaries and bonuses paid for the past three years – and raised the possibility that the city will no longer use the agency's services.

Sanders said any increases at a time when other city employees have had their pay frozen or reduced sends the wrong message.

“We're not accusing anybody of doing anything wrong, but I think that one of the things that happens in some of these corporations that are actually quasi-city entities is there's not much attention paid to them in the budget process,” Sanders said.

San Diego Data Processing Corp. was created by the city in 1979 to handle information technology systems. A six-member board oversees the agency's $48 million budget and approves salaries.

Tom Fleming, the agency's president and chief executive, said the budgeted salary increases were scaled back significantly as the city grappled with financial problems.

“We're very concerned about compensation and spending city dollars because we do understand the situation they have and we try to in every way save as much money for them as we can,” he said.

For example, Fleming said the agency has saved the city about $2 million this year by reducing merit increases from 5 percent to 3 percent, increasing the employee share of medical premiums and canceling promotions.

Fleming also said he turned down the $67,466 bonus included in the budget for him, although he accepted a $9,200 raise for a new total salary of $239,200.

The city is asking for a wide range of financial information from its agencies following a bonus scandal involving the Southeastern Economic Development Corp., which oversees redevelopment of seven square miles east of downtown. SEDC president Carolyn Smith was fired in July for giving herself and staffers $872,000 in bonuses over five years, which an auditor later called fraudulent.

Of the $597,578 in raises and bonuses budgeted at Data Processing this year, most are annual merit increases, which range from $207 for an administrative assistant to $9,200 for Fleming.

Jay Goldstone, the city's chief operating officer, wrote Monday's letter to the agency.

“If they were giving pay raises, merit increases and bonuses, at a minimum it shows poor judgment,” he said. “Obviously it flies in the face of what the mayor has done in his three years in office, what the city has done, in terms of holding salaries firm.”